Our attitude towards money is a unique and personal concept. It stems from our own values, experiences, and goals. All those elements come together to form what I would call our “financial philosophy.” First, I think it is important to have one. It’s like a mission statement for our financial lives. Second, I wasn’t so sure what mine was a month ago. I had a general idea in my head of how I felt about money but it wasn’t something I could express to anyone in a few sentences. So I set about examining my own money beliefs in a quest for my financial philosophy. I want to share some of that journey with you in hopes that you too will start wandering.
First, I had to answer some questions. Here are some of the most revealing questions I asked myself:
What did my parents teach me about money? (and the flip side, what did they not teach me about money that I wish they had)
- This could be its own blog post, but the main thing I took away is that my parents both grew up poor in Eastern Kentucky and were always very frugal. Consequently, clipping coupons is fun for me and “Goodwill hunting” is still one of my favorite hobbies.
What money mistakes have I made and what did I learn from those?
- I’ve been pretty well-behaved financially. The biggest mistakes I made were unwise spending and lack of saving money at a younger age. I bought a lot of clothes and shoes and other things a college girl thinks she needs. Then my apartment burnt down and I had nothing to show for the thousands of dollars I had spent. I learned then that material items were of much less value than experiences.
What purchases have brought me maximum utility? I’m getting a little economist-y here but what I mean by this is, what purchases brought me the most happiness, taking into account the amount of money I spent on them? Here are some of my answers so you can get a better idea:
- Travel-I’ve never regretted money spent on travel. Lifetime maximum utility award goes to my 2008 road trip across the United States. Two of my best friends and I traveled the county for two months and spent a little less than $2000. It involved a lot of camping, couch surfing and free museums, but those frugal measures led us to a lot of wonderful adventures.
- Velveeta- $5 for a block of that delicious, melty goodness? What a steal.
- NFL Sunday Ticket- It brings me great joy to see the Packers win & it’s imperative that I tune in to cheer on my fantasy players. At $60 per month or about $15 per Sunday, that’s a win in my book.
What are my short & long-term financial goals?
- Short-term: Emergency savings, building credit, paying off student loans, and a trip to South America.
- Long-term: House, (early) retirement, and more trips to South America.
Next, I wanted to consult the experts. I know I said that our attitude towards money is unique & personal, but I always find it helpful to expose myself to different perspectives in order to gain insight and inspiration. Here are a few quotes that I connected with:
- “Wealth is the ability to truly experience life.”- Henry David Thoreau
- “A wise person should have money in their head, but not in their heart.” –Jonathan Swift
- “Do not save what is left after spending, but spend what is left after saving.” –Warren Buffett
- “Don’t tell me what you value, show me your budget, and I’ll tell you what you value.” –Joe Biden
Now that I’ve been adequately reflective and inspired, it’s business time. It’s time to take all that information and condense it into my financial philosophy.
- Keep it simple.
- I think it’s important to accept that this philosophy is not static, it can (and probably should) evolve and change as you gain more experience and create new goals.
Here is what I came up with:
Gain knowledge. Do good. Consume less. Save more. Give back.
This “mission statement” will help guide my financial decision-making. It will be there when I’m making big financial decisions or when I’m being tempted by that really cool but completely unnecessary avocado peeler.
Do you have a financial philosophy? I’d love to hear it! Tell me about your financial philosophy. Leave it or your thoughts on the process in the comments.